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UK parliamentary panel urges radical bank regulation reforms

The Treasury select committee, in a hard-hitting report, has urged the UK government to implement radical reforms over banking regulation, accusing the administration of engaging in “cosmetic” amendments to the existing oversight regime.

Warning against letting lenders grow in size to multiple times the national income and becoming "too big to fail", the all-party group of MPs said that the government's strategy should be premised on the principle that no bank is "too big to save'".

The report criticises a continuing “lack of clarity” regarding which watchdog in the present tripartite regulatory regime is responsible for systemic supervision, and who has executive powers in a crisis.

The powerful committee also proposes a debate over whether to reintroduce laws that would bar deposit-taking institutions from engaging in risky operations such as proprietary trading.

The panel said it was also "perturbed" that Mervyn King, the Bank of England’s Governor, was kept in the dark about the contents of the government's white paper a fortnight before its publication, and asked Alistair Darling, the Chancellor, to ensure papers on regulatory revamp are jointly released.